Ukraine Freezes After Russia Halts Gas Deliveries

Last week, Russia's state-run gas giant and quasi-monopolist when it comes to European natgas supplies, Gazprom, announced it would not restart shipments of natural gas to Ukraine's Naftogaz starting March 1 after the two sides failed to reach an agreement, Gazprom deputy chairman, Alexander Medvedev, told journalists.

Russian gas deliveries to Ukraine were supposed to restart on Thursday following a foreign court ruling aimed at ending years of disputes between Kiev and Moscow, including two halts to Russian gas supplies to Europe through Ukraine. But Gazprom unexpectedly refused to resume deliveries, returning the prepayment for supplies made by Kiev, claiming amendments to a contract had not been completed.

The decision came as the sides reportedly failed to extend a supplemental agreement to the current gas contract, RT reported.

“So far, the supplemental agreement to the operating contract with Naftogaz has not been approved, and that is a compulsory condition for launching the shipments,” Medvedev said. "So, we have to recover the amount paid by the company in full. And it is obvious that the shipments in March won’t start."

In response, Ukraine's state monopoly said that Gazprom had failed to deliver prepaid gas. Naftogaz is reportedly planning to claim damages for supply failure from the Russian energy major.

And while the long-running dispute may, but likely won't, be resolved in court, Ukraine has suddenly found itself without heat and on Friday urged schools to close and factories to cut production, while residents shivered as the country strained to save on gas supplies.

The decision coincided with freezing temperatures all over Ukraine, and the government called on Friday for measures to reduce consumption.

"Starting today, we recommended ... to stop the work of kindergartens, schools and universities," Ukraine energy minister Igor Nasalyk told lawmakers, while urging Ukrainian companies to adjust their operations to save gas, while power companies were ordered to switch to fuel oil where possible.

Nasalyk said these savings measures would be in effect until Tuesday, when temperatures are expected to rise.

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Meanwhile, on Friday, Gazprom director Alexei Miller said that the company would immediately turn to the Stockholm arbitration court to break its contract with the Ukrainian operator Naftogaz, Russian news agencies reported. A ruling by the same court last year was meant to halt disputes over gas prices and shipments, which had often been a proxy for political disputes between Moscow and Kiev. The court set a price and ordered Kiev to resume purchases it had cancelled following the breakout in "proxy" violence between the two nations in 2014.

Also on Friday, Naftogaz said that Gazprom had not only refused to resume deliveries meant for it, but lowered the pressure in gas pipelines by 20 percent and minimized sales to other customers. In a statement, Naftogaz said that Gazprom was trying to portray Ukraine in a negative light and suggest that it was willing either to let its own population freeze or make it out to be "an unreliable transit company that takes the gas away" from European countries.

In response, Reuters reported today that Gazprom said there had so far been no impact on supplies through its pipelines to Europe, despite the sharp escalation in tensions with the key transit nation.

Russia’s Energy Minister Alexander Novak told European Commission Vice President Maros Sefcofic in a phone conversation that gas transit would not be at risk until Gazprom and Naftogaz fully terminated their agreement.

“Minister Novak assured that the gas transit from Russia to Europe is under no threat. The transit remains as reliable as in the past,” the ministry said.

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Kiev and Moscow have a history of clashing over prices and obligations under contracts for the delivery of Russian gas to Ukraine as well as transit to Europe. The standoff in the winter of 2006 triggered supply disruptions, with Russia accusing Ukraine of stealing gas intended for the European market.

The gas giants are currently involved in a long-standing litigation over the terms of the current delivery contract. Ukraine’s lawyers are struggling for annulment of the so-called take-or-pay provision that obliges Kiev to purchase a minimum annual quantity of gas. Earlier this week, Naftogaz claimed it had won a $2.56 billion victory in another round of its legal battle with Gazprom.

Comments

philipat stizazz Sat, 03/03/2018 - 19:06 Permalink

Karma can be a bitch Ukraine. Still, I'm sure your friends in Washington will immediately provide you with an endless supply of free LNG? Call Vicky.

Incidentally, to the author, your map is incorrect (i'm sure that was just an error like Goolag's deletion of Themtube sites). Crimea is no longer a part of Ukraine after 95%+ of its population excercised their right to self-determination after the Maidan coup.

In reply to by stizazz

COSMOS Joe Trader Sun, 03/04/2018 - 02:09 Permalink

Ukraine is in a total meltdown, forget about Venezuela which at least has energy stores.  Ukraine has to import most of its energy. Donbass has all the coal.  Putin is a genius, he is starving Ukraine of energy.  There will be mass unrest in the country.  Expect a government friendly to Russia to come back into play.  The only thing that can prevent this is if Europe and the USA are willing to pay for Ukraine's energy needs.  Where otherwise will Ukraine get the hard currency.  Well for a while it will get it by selling off its farmland and its women.  In ww2 you could buy a woman with a package of pantyhose, an MRE, or a pack of cigarettes.  Now you will be able to buy them again the same way and with a lump of coal.  

Right now the streets of Kiev are policed. https://www.youtube.com/watch?v=gNy8XVuBSDE

 

In reply to by Joe Trader

HowdyDoody Joe Trader Sun, 03/04/2018 - 07:47 Permalink

"Ukraine Freezes After Russia Halts Gas Deliveries"

Bullshit. The Ukrainians have been on a pay before delivery tariff from Russia for years. They have chosen war over trade. They currently prefer to spend what income they get that survives oligarch looting on trying to kill the East Ukrainians (currenly 6.9% of GDP). On March 1, Ukraine closed all schools, colleges and universities to conserve energy. Following a Stockholm arbitration court decision on March 1, Gazprom has started the process of cancelling the contracts for supply of gas to and through Ukraine. They are at liberty to purchase it at market rates ($600 per 100 cubic metersversus the subsidised $300 from Russia) from the Europeans.

 

 

 

In reply to by Joe Trader

blindfaith COSMOS Sun, 03/04/2018 - 07:32 Permalink

 

See when we create a coup in a country, there are always paybacks felt, just not felt in the usa.  You would think after decades of double crosses around the world, these countries would learn the devil is in the relationship.

 

So where is John Kerrey's son>  He is, was made, head of Naftogaz, after the coup.  Yep, payback is a bitch.

In reply to by COSMOS

PT blindfaith Sun, 03/04/2018 - 10:13 Permalink

I always took it for granted that you should not piss off your suppliers.  I get surprised when others seem to overlook such obvious ideas.

I love my suppliers.  They give me nice things.  Okay, I have to give them money in return but then I want them to have nice things too.  This philosophy has not made me rich but I appreciate the soft, fluffy lifestyle it delivers ... has potential to deliver ...

In reply to by blindfaith

SDShack COSMOS Sun, 03/04/2018 - 14:52 Permalink

Total meltdown is right. Kiev could always try to restart Chernoybl if they can't get natgas. The key isn't Kiev, it's Odessa. If Odessa flips to Russia, then a land bridge along the Black Sea coast from the Crimea to Romania is at hand. The Ukraine then becomes a land locked toxic shell.

In reply to by COSMOS

Greed is King philipat Sun, 03/04/2018 - 04:44 Permalink

Yes, 95% of Crimeans (98% actually) exercised the right to self determination and rejoined Russia; but under the terms of Western Democracy, self determination is illegal unless specifically permitted by Washington and Washingtons masters in Wall St. Therefore the map is correct in every detail and in strict compliance of American dictates.

In reply to by philipat

SDShack Yogieu Sun, 03/04/2018 - 15:07 Permalink

The Crimea was always Russian throughout history, The Ukraine, never really existed as country. Kiev was actually the birthplace of Russia, being formed by Norsemen and called Kievian Ruse. Over time, its borders were always changing, being part of various empires, including the Tartar-Mongols, and the Austria-Hungary and Polish Empires. The Crimea was annexed to Ukraine under Kruschev because he was originally from the Ukraine, and wanted the Crimea as part of his "homeland". But the Crimea has never been historically anything other then Russian.

In reply to by Yogieu

land_of_the_few Justin Case Sun, 03/04/2018 - 06:19 Permalink

"Kathleen Biden accused estranged husband Hunter of reckless spending on 'drugs, prostitutes, and an $80,000 diamond' in divorce docs - days before his affair with widowed sister-in-law Hallie was revealed"

" Kathleen claims Hunter spends money on 'drugs, alcohol, prostitutes, strip clubs and gifts for women with whom he had sexual relations' in her new motion "

http://www.dailymail.co.uk/news/article-4276134/Kathleen-Biden-divorce-…

In reply to by Justin Case

SweetDoug stizazz Sun, 03/04/2018 - 10:06 Permalink

'

'

'

Another delusional, unemployed, sitting-in-his-mother's-basement, keyboard-warrior, chin-dribblin' asshole who wants to convert everybody to his weak explanations that not only the world's, but more importantly, his problems in life can all be traced back to the… 

THE JOO-OOO-OOO-OOO-OOO-OOOZ.

What a loser.

 

OJO

V-V

In reply to by stizazz

uhland62 bunkers Sat, 03/03/2018 - 19:13 Permalink

That's not the worst.

 

When houses are not heated, water pipes freeze and when spring comes the pipes burst and destroy housing. If the water supplier doesn't switch off the water altogether, dwellings will be destroyed through flooding, not just a couple of pipes leaking. Ukrainians must know that but if they are thinking ahead to empty all water pipes and shut off all water supply is doubtful. 
Thinking ahead - oh dear!

In reply to by bunkers

swmnguy uhland62 Sat, 03/03/2018 - 19:38 Permalink

I live in Minneapolis.  The weather here isn't too different from much of Ukraine.  For early March we're having a very warm day, nearly 50 F.  But next week we get back to more seasonal highs around freezing, with maybe 6" of slushy snow on Monday.

I really like it when my heat works.

I do have a wood-burning fireplace but if I have to use it for heat we've got a lot of problems all at once.

Ukraine is a great example of what always happens when Nazis get in charge.  Everything goes to hell in a handbasket, quickly.

In reply to by uhland62

land_of_the_few pluto the dog Sun, 03/04/2018 - 06:02 Permalink

Andriy Biletsky the self-proclaimed "white fuhrer" does not appear to be Jewish.

He will be their Nazi leader, and you will lick his boots, along with all Ukraine's neighboring credulous peoples.

He will be given funding by the EU and the US Democratic Party to promote murdering and genocide in Ukraine and in all the neighboring countries, which he hates, including Poland.

In reply to by pluto the dog

thisandthat HowdyDoody Sun, 03/04/2018 - 15:24 Permalink

Shouldn't actually be surprising, at all...:

The zionist movement back then was comprised of two factions: the socialist, and the fascist.

The former are behind the Bolshevik and the Menchevik "soviet" factions; the later offered to side with the nazis, in exchange for Palestine...

Israel itself was a socialist leaning state. The kibbutz, for instance, were modelled straight after the soviet kolkhoz.

In reply to by HowdyDoody

keep the basta… uhland62 Sat, 03/03/2018 - 22:31 Permalink

Yes. Ukraine told the court it imported gas from europe, had a lot itself and only a small amount from Russia as per the news reported here and on RT after the Swedish court made a imbalanced decision, which is illegal under Swedish law. 

Now they are crying out in pain after attacking Russia. Ukr and Gasprom could not get an agreement to sign after Gasprom returned the ukr payment immediately it was made. 

Ukr lying again. Uhlandia and guess who ukr will blame, crying out in pain as it self inflicts.

In reply to by uhland62